The debate (unfortunately) rages on between Progressives, their Statist friends, and the defenders of liberty and the voluntary market. It's time to help put much of that debate to rest.
Much of the argument from 'the left' (whatever that even means these days, considering their ad-hoc defense and support of Obama, AKA Bush 2.0) attempts to center our economic and financial system's woes around the claim of either too much 'deregulation', not enough increased regulation - or some combination of both.
|Simply put - such a claim is completely, utterly divorced from reality.|
Ever since the Code of Federal Regulations (CFR) started back in 1938, there has been a net *increase* in regulation *every year*, with the exception of 1985 and a couple years in the early 90s. Under Bush, net economic regulations *increased* every year he was president. Obviously, I shouldn't have to go into detail regarding the regulatory excesses under Obama.
I work in the banking industry - and it is above and beyond the most *heavily regulated* industry in the United States. There is literally just about one regulation for every letter of the alphabet (regulations are in fact named as single letters) and then some, not including legal tender laws, what are essentially rent controls (and more) dictated down from the Federal Reserve, the CRA, the ECOA, FACT Act, Dodd-Frank, FHA, GSE involvement (such as FME & FRC), and on, and on, and on.
The repeal of Glass-Steagall (which one all-too-often hears about) was certainly significant, but *it* was not the *cause* of the financial meltdown. It did, however, further expose the unsustainability of our system (it's repeal made markets *more efficient*) and expedited the necessary bust. Thank Agora (SEK3 nods) it happened when it did. Our system may be screwed anyways without an extremely significant overhaul, but without repeal it may have gone on longer under the radar, contributing to the hollowing out of our economy even more than it already has - resulting in something potentially much, much more catastrophic.
Clearly, increased top-down, centralized 'regulation' has *not* been lacking (The US has around 168,000 pages of regulations, more than any other country in the world, by far - with thousands more added every year nowadays) and clearly it is not the answer.
Despite *alleged* good intentions, this has all resulted in a concentration of corporate power and market share into those most specially interested and connected companies, those with the most cash to buy and push legislations onto their respective industry (is it really any surprise that most regulations for whatever industry are written and pushed by the biggest players in that industry?), and those with the economies of scale to most easily *absorb* those regulations. Smaller or newer competitors that are more capital-restricted can no longer compete - and not to mention don't have the economic nor *political* capital in order to buy out the legislators themselves, like their (much) larger and more connected competitors. All other costs due to these State-imposed regulations are naturally passed down to the consumer and/or worker.
Of course, I would be doing a major disservice to the defense of the voluntary marketplace if I don't at least mention how the largest and/or most politically connected banks and other corporations received bail-outs at the expense of the taxpayer.
Then, the Corporate-State creates numerous *additional* regulations to expand labor and restrict the flow of capital. In a place where labor abounds but there is comparatively little capital, the businessmen will tend to have more leverage. In extreme cases they'll basically have it all (such as the onset of the industrial-era of the late 1800s to the early 1900s, also known as the 'Gilded Age'). In a place where capital abounds (such as a more modern, evolved market capitalist system) but there is comparatively little labor it's the other way around: high wages, lots of room for employees to negotiate, and plenty of opportunities to jump ship if the cigar chompers aren't making the workers happy.
The 'Progressive' response to corporate power is to strive to control, restrict, and punish capital. In other words, to make labor more abundant and less valuable. Obviously, this results in accomplishing exactly the *opposite* of what they *claim* to want to accomplish.
Mix this all together, and it all ultimately results in the Corporate-State system we have now.
Think of (free-market) Capitalism like sex. When it's voluntary between parties, it's a good thing. A wonderful thing, even. But when it is mixed with coercive force (via the State) - Capitalism becomes a twisted, ugly version of it's original intention. Much like how Capitalism mixed with the State becomes Corporatism - sex mixed with coercive force, becomes rape.
Einstein once said that the definition of insanity is doing the same thing over and over and expecting a different result. Thus, to avoid perpetuating the legitimate insanity of our current Corporate-State system, the answer to our problems is not to continue on our current path of destructive, top-down, and centralized 'regulation' - but to finally free our markets and allow organic, spontaneous regulation to take hold instead.
Contrary to the Progressive and Statist claim that this means 'no regulation' or letting corporations and rich individuals 'run amok', it instead means that while markets remain dynamic (as they always will), the regulations that the market itself will impose will be dynamic as well (as opposed to State-imposed regulations which are static, in which a dynamic market will always find ways around them merely at the increased cost to consumers and/or workers).
Which leads me to my next point... see my post on 'Anarchy, Government, and the State.